SARU 'satisfied' with ZAR23-million loss

NEWS: The South African Rugby Union said they are 'satisfied' with their operating result for last year, despite reporting a group pre-tax loss of ZAR23.3-million.

The loss was attributable to a decline in sponsorship revenues but cost savings meant that normal operations were unaffected.

SARU maintained its support to the 14 member unions, which increased by 90 percent to R336-million, principally on the back of increased broadcast income, as group revenues rose 19.9 percent to ZAR1,2-billion (ZAR997-million in 2015).

Competition costs rose 46 percent to ZAR155-million while fees for player image rights and insurance increased almost fourfold from ZAR23.5-million to ZAR87.3-million.

The new arrangement secures the image rights of provincial players on behalf of member unions for their use in marketing and branding campaigns (having previously only related to national players). The insurance covers all professional players in the country against temporary and catastrophic injuries.

The costs associated with national teams declined 4 percent to R197m - attributable to performance related payments - while delivery of sponsors' rights costs fell 24 percent to R125m due to a reduction in the size of the portfolio.

"In a very difficult economic environment and considering the many challenges to ensure that we deliver on rugby imperatives, we consider this a satisfactory operating result," said Jurie Roux, CEO of SARU.

"We increased our support to members and the investment in rugby activities. However, the loss of R129m in budgeted sponsorship placed pressure on operations.

"Our cash flow was also negatively impacted by the payment of provisional taxes made to SARS against an estimated normal taxation charge of R78,7m. The structure of certain foreign broadcasting rights agreements gave rise to an increased taxable income that was expected to be recognised over the duration of the new five-year broadcasting cycle only."

The significant normal taxation charge, against a pre-tax loss of R23.3 million, resulted in an accounting adjustment to reflect a deferred taxation asset of R100,4 million compared to the R14 million of the previous year.

SARU's investment into grassroots development, women's rugby, elite player development at junior level and academies was able to continue however.

Roux warned that 2017 was unlikely to see an easing of pressure on SARU finances.

"Securing and retaining sponsorships is now key for 2017 although we will continue to review our cost base," he said.

"It is likely to be another challenging year if we are to maintain our current level of support for our members and our other rugby activities."

The results are scheduled to be approved at the SARU Annual General Meeting in Cape Town on 6 April 2017.